The Fed Challenge begins with regional and district rounds of competition. Each Fed Challenge team, consisting of three to five students, presents an analysis of the current state of the economy backed by current economic data and a monetary policy recommendation for the Federal Open Market Committee (FOMC). Following the presentation, judges question each team about their presentation and their knowledge of macroeconomic theory. Federal Reserve Bank economists and officers judge the district competitions.

One Fed Challenge team from each of the four participating Federal Reserve Districts competes at the national competition in Washington, D.C. FOMC members — Federal Reserve Governors and Reserve Bank Presidents — judge the national finals.

The competition was created in 1994 by Lloyd Bromberg, the Director of Education Programs at the New York Fed.